What do the quiet former Fed chair and flashy former bond king share?
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Version 0 of 1. You would think that a lawsuit by former bond king Bill Gross and a book by former Federal Reserve chairman Ben Bernanke would have nothing in common. But you would be wrong. When you read Gross’s legal complaint against his former employer, Pimco, and Bernanke’s “The Courage to Act,” you see that despite their fame and riches (actual in Gross’s case, prospective in Bernanke’s) both men are suffering from hurt feelings and want to tell us that they’ve been wronged. Bernanke has taken the traditional route — writing a book about his life and times. Gross, by contrast, has taken a most unusual route — an attention-grabbing lawsuit that attacks the people who bested him in the public relations wars and then forced him out of Pimco, the investment management company he helped found in 1971. Gross’s complaint has the most compelling opening I’ve ever seen in a legal document: “Driven by a lust for power, greed, and a desire to improve their own financial position and reputation at the expense of investors and decency, a cabal of Pimco managing directors plotted to drive founder Bill Gross out of Pimco in order to take, without compensation, Gross’s percentage ownership in the profitability of Pimco. Their improper, dishonest, and unethical behavior must now be exposed.” After that, the document becomes much more legalistic — but the first paragraph has already grabbed us. The suit was filed in the Superior Court of California in Orange County, but its real target audience is the court of public opinion. Although his lawyers won’t say, it sure feels as if Gross — an excellent and prolific writer — wrote that opening paragraph or, at the very least, was a major contributor to it. Because of his writing skills, quick wit and ability to give a good interview, Gross generated positive press for decades as he became a billionaire money manager with huge influence on the bond market. But a few years ago, he was twice bested on the public relations front: first by Mohamed El-Erian, once his heir apparent at Pimco; then by Pimco’s current top managers, who forced him out last year. His suit isn’t about money — he has promised to donate the proceeds, if any, to charity. It’s about getting his version of events in the public record, in his own way. In what, to me, seem to be his own words. Bernanke’s book is different in tone from Gross’s suit. But the generally soft-spoken and polite Bernanke goes out of his way to take shots at two parties who hurt his feelings during his tenure as head of the Fed: Republican politicians and former American International Group chief executive Hank Greenberg. Bernanke was generally considered to be a conservative Republican when President George W. Bush nominated him to run the Fed but came under sustained Republican attack for much of what he did to keep the financial system from collapsing. “I . . . lost patience with the know-nothing-ism of the far right,” Bernanke writes. “I didn’t leave the Republican party. I felt that the party had left me. . . . I view myself now as a moderate independent, and I think that’s where I’ll stay.” He also takes swipes — to my mind, well-deserved — at Greenberg, who built AIG into the world’s biggest insurance company but was kicked to the curb by its board before the financial crisis brought it to the brink of bankruptcy. Greenberg has undertaken a sustained legal and public relations campaign accusing Bernanke and his fellow rescuers of shortchanging AIG’s shareholders while bailing out the company’s creditors. The Fed and Treasury Department ended up with 92 percent of AIG’s common stock in return for helping keep the company out of bankruptcy. Greenberg claims that AIG shareholders were cheated — forgetting to point out that 8 percent of something is worth more than 100 percent of nothing. Bernanke slaps back at his tormentor by saying that the transactions that brought down AIG were started during Greenberg’s tenure. He also writes, in a line that in its own way is as clever as that opening paragraph in Gross’s lawsuit, that Greenberg’s suit was “a remarkable demonstration of chutzpah.” Bernanke is knowledgeable about Jewish matters (as you can tell from the book’s initial chapters), and probably knows that “chutzpah,” a Yiddish term, doesn’t mean “nerve,” as most people think. It means “gall” — a pejorative term that Greenberg’s suit deserves. The bottom line: When we look at public figures such as Gross and Bernanke, it’s easy to think of them as abstractions who have no feelings. But as we can see from the lawsuit and the book, both of these guys are human beings. It’s a good thing to remember. |